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Actual exam question for CISI's UAE-Financial-Rules-and-Regulations exam Question #: 81 Topic #: 1
A fund manager is considering investing in medium-term bonds, commercial papers, and deposit certificates. Under the regulations, which of these can be held under a cash investment fund?
CISI UAE Financial Rules and Regulations define that cash investment funds may hold commercial papers and deposit certificates only. Medium-term bonds are typically excluded from cash funds as they have longer maturities and more interest rate risk, which conflicts with the liquidity and capital preservation objectives of cash funds. Commercial papers and deposit certificates, with their shorter maturities and high liquidity, are appropriate instruments for cash funds, providing stable, low-risk returns in line with regulatory requirements. Reference: CISI UAE Financial Rules and Regulations - Investment Funds Asset Eligibility, Section 6.4.3 (2023).
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